US Stocks Rally In DJIA's Best Two-Day Gain Since July

DonnaKardos

NEW YORK (MarketWatch) -- U.S. stocks climbed Thursday, extending the market's strong start to the month as strong chain-store sales and better-than-expected pending home sales painted a brighter picture of the U.S. economy.

Also helping stocks, pressure on the euro eased on talk that the European Central Bank was actively buying more bonds of some of the bloc's more financially stressed governments.

The Dow Jones Industrial Average was up 92 points, or 0.8%, to 11348 in midday trade. Bank of America and J.P. Morgan Chase were among the Dow's strongest components after Goldman Sachs lifted its view on the financial sector to overweight, marking the first time the firm has been positive on financials since 2008. Bank of America climbed 2.8% and J.P. Morgan added 2.4%.

The Nasdaq Composite rose 0.9% to 2572. The Standard & Poor's 500-share index gained 1% to 1218, led by its financials and industrials sectors.

Boosting sentiment for the holiday shopping season, sales at retail stores opened more than a year rose 6% in November, above the estimated growth of 3.6% and the year-ago gain of 0.6%, according to Thomson Reuters. Shares of Abercrombie surged 11% after the teen retailer posted a 22% jump in its November same-store sales. Other retailers that climbed on better-than-expected sales included J.C. Penney, up 2.5%, and Costco Wholesale, up 0.9%.

Investors were also encouraged by the National Association of Realtors' pending home sales index, which unexpectedly soared 10.4% to 89.3. The report boosted home-improvement retailers and home builders. Lowe's climbed 3.9%, Home Depot rose 3.8%, Lennar gained 6.8% and PulteGroup added 4.1%.

The better-than-expected readings on retail sales and pending-home sales helped extend Wednesday's rally on improvement in private-sector jobs. The Dow is up more about 3.1% over the two-day stretch, marking its biggest two-day gain since July.

"The underlying theme in U.S. data is quite strong right now," said Barry Knapp, managing director of equity research at Barclays Capital.

In late November, the market had been overwhelmed by concerns over the euro-zone debt crisis and worries that the S&P 500 could break below its support level at 1175, noted Tom Donino, co-head of trading at First New York Securities.

"The economic data here for the most part over the last two weeks has been getting marginally better every time it comes out, so once you got all those sellers away," the market has finally been able to rally on the U.S. economic data, Donino said.

"Now it looks like performance-chasing to the end of the year," he added, given that fund managers who may be underperforming their benchmarks now have less than a month to try to catch up.

The recent string of better-than-expected economic reports is boosting investors' expectations for the government's report on November nonfarm payrolls due Friday morning.

"Certainly it should bode well for at best for it not to be negative," Donino said.

In Europe, the ECB abandoned its plans to wind down emergency support for banks and government debt markets, responding to concerns that an early exit from such programs could jeopardize the common currency for 16 nations. It also will continue to offer unlimited liquidity to banks until at least April 12, according to ECB President Jean-Claude Trichet.

While Trichet disappointed investors looking for new support for stressed economies on the region's geographic periphery, talk of the central bank actively purchasing their debt helped lift the euro. The euro was recently at $1.3189, up from $1.3137 late Wednesday in New York.

The U.S. Dollar Index, tracking the U.S. currency against a basket of six others, fell 0.5%. Demand for Treasurys rose, pushing the yield on the 10-year note down to 2.96%. Crude-oil prices climbed above $87 a barrel while gold futures also rose.

Among stocks in focus, Kroger fell 8.1% after the biggest traditional supermarket operator in the U.S. narrowed its profit and sales expectations for the year and slashed $100 million from planned capital spending.

PepsiCo slipped 1.2%. The company agreed to acquire a 66% stake in Russia-based Wimm-Bill-Dann Foods for about $3.8 billion and will look to acquire the rest of Russia's largest food-and-beverage business. U.S. shares of Wimm-Bill-Dann shares surged 27%.

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information. Intraday data
delayed per exchange requirements. S&P/Dow Jones Indices (SM) from Dow Jones & Company, Inc.
All quotes are in local exchange time. Real time last sale data provided by NASDAQ. More
information on NASDAQ traded symbols and their current financial status. Intraday
data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. S&P/Dow Jones Indices (SM)
from Dow Jones & Company, Inc. SEHK intraday data is provided by SIX Financial Information and is
at least 60-minutes delayed. All quotes are in local exchange time.